The economic fallout of the COVID-19 pandemic has left businesses reeling and bankruptcy will become an unfortunate reality for some. Many have faced dramatically falling revenues, liquidity constraints and difficulty satisfying their existing loan obligations. Financially-troubled businesses can take several steps to buttress their balance sheets, boost near-term liquidity, and enhance their financial flexibility. On the other side of the table, creditors that deal with distressed customers can take measures to reduce their risk of being subject to litigation brought by bankruptcy estates to recover so-called “preferential transfers.”
The Distressed Company’s Perspective
As revenues decline and previously-available sources of credit dry up, businesses that face financial distress should conserve their cash to the greatest extent possible. Officers and managers should create cash flow projections by determining how much cash their companies have on hand, how much they expect to collect in the near-term, and how much they will need to operate over the next several months.
This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.
To view this content, please continue to their sites.
Not a Lexis Subscriber?
Subscribe Now
Not a Bloomberg Law Subscriber?
Subscribe Now
LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.
For questions call 1-877-256-2472 or contact us at [email protected]
